LONDON -- The shares of Mothercare (ISE: MTC.L) jumped 6% to 247 pence in early trade this morning after the retailer provided a first-half trading update. The advance extended a recovery that has seen the midcap's shares rally from 127 pence last year to register a 94% capital gain.
Mothercare's update revealed that group sales had contracted by 6% during the 28 weeks to Oct. 13, with international sales up 11% and U.K. sales down 8%. However, the second quarter of the year showed the U.K. division improving on the first, with domestic like-for-like sales turning positive and advancing 0.3%.
Outside the U.K., Mothercare noted that its stores in Asia, the Middle East, and Africa continued to perform "at the top end of ... expectations." The chain also confirmed plans to take the overseas outlet count from 1,098 to 1,178 by the end of the second half. In the U.K., Mothercare shut 31 stores and currently operates from 280 locations. A further 19 U.K. stores are earmarked for closure.
Simon Calver, chief executive of Mothercare, summarized the performance by saying:
Our strategy outlined in May this year is showing early signs of progress. In the U.K., we have put the customer back at the heart of what we do. This is already beginning to have a beneficial impact on like-for-like sales, which along with our online business have returned to growth.
International continues to grow despite difficult trading conditions in the eurozone and adverse currency movements. We recognise that our most important quarter which includes Christmas is still ahead of us. We are confident about delivering against the targets we set out in our three-year plan.
This time last year, Mothercare issued a profit warning, sacked its boss, and cut its dividend by two-thirds -- and watched its shares sink to 127 pence. However, fresh leadership has ensured that smart investors who spotted the turnaround opportunity have been rewarded handsomely.
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